The proportion of business leaders who believe their organisations are ready to address HR skills gaps has increased 30 per cent in the last year, indicating the HR function is finally “turning the corner”, according to new research by Deloitte.

For the first time in the four years of its Global Human Capital Trends research, there are real signs of change and progress, with HR teams experimenting with new ideas and taking significant steps to improve their skills, the services firm says in its 2016 report.

Last year’s report showed HR needed an “extreme makeover” – HR skills were weak, organisations weren’t spending enough on developing HR professionals, and the HR function itself was too focused on service delivery.

This year, however, “while HR teams still face daunting challenges – particularly in leveraging design thinking, digital HR, behavioural economics, and real-time feedback – a new generation of inspired HR leaders is entering the profession, and the progress is real”, Deloitte says.

The report, based on a survey of 7,096 business and HR leaders from more than 130 countries (including 114 leaders from Australia), shows the proportion of respondents rating HR performance as “good” or “excellent” has been trending upward.

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It also shows HR’s readiness to address leadership development, employee engagement and culture, and analytics increased in the last 12 months (by 14, 13 and 11% respectively).

As a result, the proportion of leaders who think HR is underperforming or just “getting by” has fallen 11 per cent over the last two years, Deloitte says.

It says three factors contributing to HR “turning the corner” are:

  • HR is innovating and improving – 60 per cent of leaders believe their organisation’s HR teams are innovative, compared to 56 per cent last year;
  • HR is aligning itself to the business – 64 per cent of survey respondents rate themselves positively in this area, compared to 58 per cent in 2015; and
  • HR is beginning to re-skill – 68 per cent of leaders are focusing on this in 2016, compared to 66 per cent last year.

Differences exist across the world in the rated importance of changing HR skills, and Australia sits in the middle, with 78 per cent of leaders rating it “important” or “very important”, the report says.

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More business savvy

Deloitte urges HR teams not to look at this progress and “take their feet off the accelerator”, saying they must “build on their momentum by tackling the remaining challenges”.

The report shows only one in five HR teams (17%) report having a very good understanding of their organisation’s products and profit models; just 14 per cent believe they are highly skilled at addressing global HR and talent issues; and eight per cent say they have a very good understanding of cybersecurity issues.

Deloitte suggests HR professionals must become more business-orientated specialists, by:

  • analysing, building and developing organisational network expertise;
  • building managers who can coach and develop their people, not just give directions;
  • understanding culture models, and then measuring and improving workplace culture;
  • improving their “design thinking” to help managers and employees become more productive and less stressed;
  • embracing behavioural economics and testing;
  • moving beyond mobile and cloud apps to build “true digital HR platforms”; and
  • crafting and communicating the organisation’s value proposition.

“Part of this transformation includes HR teams implementing talent management for themselves,” Deloitte notes.

They can do this by implementing job rotation programs that move “HR people into the business and businesspeople into HR” to learn aspects of the relevant roles; developing internal certification programs, research groups and developmental assignments to find high-potential leaders; and attracting younger HR professionals who “intuitively understand the life, needs, and expectations of the new generation of workers”.

Global Human Capital Trends 2016, Deloitte, May 2016


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